The Buiucani court in Moldova’s capital city Chisinau sentenced Veaceslav Platon to 18 years in prison on April 21 after finding him guilty of siphoning off MDL800mn (€40mn) from Banca de Economii savings bank (BEM).

The case is one of the multiple frauds through which $1bn was stolen from three Moldovan banks that subsequently went bankrupt in 2015-2016. Platon is the second individual sentenced in the investigations, after former Prime Minister Vlad Filat. The case against Platon is also related to the laundering of $46bn siphoned off from Russian banks, through Moldova’s second largest bank Moldindconbank, which is controlled by Platon.

Platon is often described within Moldova as a “corporate raider” - a term used in the former Soviet Union to describe the undermining of healthy businesses followed by hostile takeovers. He was reportedly the author of several large-scale raider attacks in the former Soviet space in the past decade, resulting in tens of billions of dollars being siphoned out of Russia. In Moldova, he is suspected of having taken control over Moldova-Agroindbank (MAIB) in 2013 through firms registered in the UK, Cyprus and the Baltic states.

However, Platon says he is innocent, and claims that Democrat Party (PD) leader Vlad Plahotniuc has been trying to take over key Moldovan banks, including those controlled by Platon. He has also claimed Plahotnuic used his control over the Moldovan judiciary to influence the latest case.

The court also ruled on April 20 that Platon must pay back MDL869mn ($45mn) to BEM, although the court’s decision can be appealed.

The money is expected to be used to cover part of the $1bn stolen from the three banks - BEM, Banca Sociala and Unibank. The government issued $680mn bonds to cover the losses (with the rest being de facto covered by the central bank by the exchange rate differential) and is striving to recover the money with the help of financial forensic firm Kroll.

Under the ruling, the money should be paid back to BEM from the revenues generated by the sale of 64% of Moldindconbank, according to the court decision published by deschide.md. Other assets belonging to Platon were also seized and will be used to repay the damage to BEM. They include 83% of insurer Asito, 87% of Alliance Insurance Group and several real estate assets.

The decision indicates the court established that Platon used the money siphoned off from BEM to buy the majority stake in Moldindconbank and the two insurance firms.

Moldova’s central bank blocked the voting and other rights of shareholders holding nearly 64% of shares in Moldindconbank last October. The shareholders had been operating as a coordinated group, the central bank said at the time. The shareholders’ representatives on the bank’s board were replaced with independent, temporary managers.

Unless the blocked shareholders find a buyer for their shares, the financial market supervisory body will sell the shares on the stock exchange and, if it fails to find a buyer, cancel the shares and decrease the bank’s capital. The largest Moldovan bank Agroindbank has reached the final stage of a similar process, but the regulator is delaying cancelling its shares since the blocked shareholders sued the state at an international court.

Connection to the "Russian Laundry"

The involvement of Moldindconbank in the so-called “Russian Laundry” was revealed by OCCRP back in 2014. Novaya Gazeta’s investigations, published in 2017, go further in identifying the source of the money stolen from Russia and its flow through foreign banks. Besides Moldindconbank and several Latvian banks, whose licenses have already been withdrawn over their involvement in the scheme, a multitude of shell companies in Russia, the UK and offshore tax havens were identified by journalists, based on open sources including documents leaked from Panamanian law firm Mossack Fonseca.

In brief, the Russian companies whose funds were siphoned off were ordered by corrupt Moldovan judges to pay large amounts of money to offshore entities after they were appointed guarantors of fake contracts among shell companies. The Russian companies, run by accomplices involved in the deal, opened bank accounts in Moldova and bailiffs simply executed the transfer of money from their accounts to the accounts held by offshore firms in Moldindconbank, which was an important element of the scam, according to the investigations. The Moldovan bank has admitted carrying out the transfers, but claimed they were perfectly legal.

Businessman Shor escapes punishment again

While both Platon and former Prime Minister Filat have now been sentenced in connection to the $1bn bank frauds in Moldova, Ilan Shor - an influential local businessman and key player in the fraud and laundering cases as head of BEM - has not been sentenced. Prosecutors claimed in 2016 that they are still investigating Shor’s involvement in large-scale banking frauds.

Moldova’s head anticorruption prosecutor Viorel Morari explained on July 27 that Platon and Shor were the beneficiaries of $175mn scams involving Victoriabank and BEM. Platon reportedly coordinated with Shor, who had previously been arrested for large-scale fraud and money laundering.

According to Morari, firms controlled by Platon received $40mn and MDL124mn loans (around $140mn in total) from Victoriabank, when he apparently controlled the bank in 2011-2012. The money then sent to offshore firms. In November 2014, loans extended by BEM to Moldovan firms Provolirom and Caritas Group were used, through offshore firms, to repay the loans initially extended by Victoriabank in 2011-2012. BEM was controlled at that time by Shor.

The case against Filat was grounded on the testimony of Shor, who claimed he gave a $250mn bribe to the former prime minister. Filat claims he is innocent, and during his trial urged the prosecution to identify the $250mn allegedly taken as a bribe. His lawyer also claims that some witnesses in the case were intimidated, while others were never heard. Filat was sentenced to nine years in prison in June 2016.

Shor was identified as the beneficiary of the $1bn siphoned off from the three banks, but investigations into his role are progressing slowly, and there is speculation they may never be concluded given the help Shor has given to Filat’s political rival Plahotniuc, who is now the formal leader of the ruling majority.

Shor’s involvement in the Russian Laundromat has also been revealed by local investigative journalists. An initial investigation into Novaya Gazeta’s pool of data, carried out by Moldova’s RISE investigative journalism project, named Shor as one of the final recipients of the money. Six companies in the Shor group of companies were the final recipients of $22mn.

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